Harvard University is reaping the rewards of investing in plantation forests in New Zealand when forestry investments were unfashionable. At a CNBC Delivering Alpha Conference Jane Mendillo, chief executive of Harvard Management Company, said she really liked natural resources, and in particular timberland. Source: The Herald Sun
It was a rare appearance from the head of the company that manages the $US32 billion ($A30.63 billion) endowment of the ivy league university but the position is consistent.
Harvard purchased cutting rights to Kaingaroa, the 170,000-hectare central North Island forest originally planted by the state, from receivers in 2003.
At the time the forestry industry was facing headwinds from a high New Zealand dollar, a flood of Russian softwood into China, high shipping costs and doubts that the Chinese would every take to softwoods like pine.
“Natural resources is our favourite area and it happens to be a favourite area where we feel that we may have an advantage as an early entrant into the asset class,” Ms Mendillo told the CNBC conference last week.
She said forests produced products the world increasingly demanded but investments in them took expertise to execute well.
New Zealander Andy Wiltshire is the executive behind the Harvard investment in New Zealand forests.
Harvard’s latest results showed an 18.8 per cent return from its natural resources portfolio in the previous year and a 12.8 per cent annual return over a 10-year period.
Harvard sold a 40 per cent stake in Kaingaroa to New Zealand Superfund in 2008 for $233.74 million, and in May NZ Superfund said it was in talks in conjunction with timberland investor GMO Renewable Resources about the possible purchase of the remaining 60 per cent Harvard stake.